Staples, Office Depot reportedly in merger talks

Staples Inc. and Office Depot Inc. are in advanced talks to combine, according to people familiar with the matter, in what would be a major step toward consolidating the retail market for pens, paper and other office supplies.

The price and structure of the proposed deal couldn’t be learned. Staples has a market value of about $11 billion, while Office Depot, which in 2013 absorbed rival OfficeMax, has a market value of about $4 billion. There is no guarantee a deal will be reached, the people cautioned.

Together, the two companies have roughly 4,000 stores and annual sales of more than $35 billion. A combination of the two likely would get a close look from antitrust regulators, who in 1997 sued successfully to block the same proposed merger, bankers and analysts have said.

But some analysts say the retail landscape has changed sufficiently since then, citing the rise of online retailers like Amazon.com Inc. and increased competition from big-box chains like Wal-Mart Stores Inc. and Target Corp. , which all sell office supplies now, too. In approving the union of Office Depot and OfficeMax, regulators noted that consumers have more choices than ever about where to buy office binders, paper, staplers and the like.

"The current competitive dynamics are very different," the Federal Trade Commission wrote in that review. "The Commission’s investigation shows that today’s market for the sale of consumable office supplies is broader" than it was in 1997.